Telstra eyes Asian acquisitions

Telstra has signalled it is prepared to make technology acquisitions in Asia to compete against US telcos in the region for services such as cloud computing, video conferencing and internet services.

Telstra Global president
Martijn Blanken
told The Australian Financial Review that the telco’s business in Asia was relatively small compared with other players in the region and that he was planning to grow it by buying out or partnering with infrastructure and cloud computing providers.

“We’re very much looking to see how we can drive additional scale through inorganic opportunities, both partnerships and acquisitions," he said. “We’re looking at both [bolt-on and large-scale acquisitions].

“Sometimes you take your customer by the hand and say ‘I provide these services on your premises but . . . let’s move to the cloud’ but if you do not have access to the customers today it’s difficult to make the transition.

Telstra CEO David Thodey has said Asia was a tough market but his company would pursue it.
Photo: Louise Kennerley

“So the point is you . . . get an acquisition that gives you access to a group of customers you can take on a journey."

Mr Blanken said Telstra was going up against global telecommunications companies including AT&T and Verizon in Asia. “We were running behind them and lacking focus and it took us about three years to course correct that," he said. “Now we have a focus on what we can do that others like AT&T and Verizon can’t do. . . like our relentless focus on customer experience."

Walking a fine line

Arnhem Investment Management partner and fund manager Theo Maas said Telstra had no choice but to look for growth in Asia. He added US telecommunications provider Pacnet was rumoured as a potential target.

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“Mr Thodey is walking a fine line in terms of looking for growth outside of Australia to compensate the fact that the domestic business as a total pie is probably not going to grow anymore," he said. “But he also knows shareholders are not going to be very positive about a big international acquisition so that’s a really complicated situation he’s put himself in. Given the position they’re in they have to get local assets ... because they lack the scale of other players."

Telstra CEO
David Thodey
has said Asia was a tough market but his company would pursue it.

“It’s not easy . . . it’s a very heterogeneous market," he said. “But you’ve got to be there and you’ve got to think through how you can create value," he said.